Kentucky Fried Chicken and the Global Fast-Food Industry Essay

3602 Words Oct 12th, 2005 15 Pages
Kentucky Fried Chicken and the Global Fast-Food Industry
Case Analysis
1.0 Source Problem

The change in demographic trends in the past two decades has seen an overall increase in costs for KFC and other fast food chains. Due to immense price competition and saturation of the US market, KFC is unable to raise its prices to cover the increased costs. The slower US population growth rate, oversupply of fast food chains and the minuscule 1% growth in the US restaurant industry per year has resulted in KFC¡¦s focus on expansion of their international markets.

2.0 Secondary Problems

2.1 Short Term
Ć New product introductions are slow.
Ć Market research inefficiency. Eg. Germans were not accustomed to buying takeout or ordering
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Substitutes ¡V High
Ć One of the main problems that face many companies today is the threat of substitute products. There main substitute products competitors include McDonalds, Burger King, Wendy, Domino, Chik-fil-A and Boston market, Popeye, etc.
ƒÜ Threat of substitute products ¡V healthy alternatives.
Ć Fast food restaurant have been forced to change due to the growing income of consumers which provide them with better and affordable alternative such as a full services restaurant. Full Service restaurant differ tremendously with the fast food restaurant in atmosphere, ambience and food quality. Demand for healthier food among consumer is another driving force that prompts fast food chains to change.
Ć There has been a lower growth rate in the global fast food industry mainly because all the segments are chasing the same customers. Increased growth in any of the segments would mean a decline in the other interrelated segments.

Drivers of Industry Change
Ć Declining margins in the fast-food chains reflected the increasing maturity in the US fast-food industry. As an alternative to domestic expansion, many restaurant began to expand into international markets to reap the benefits from

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